Fed chair, Janet Yellen, during her brief to the press on rate hike has categorically mentioned that it will not regulate the digital currency “Bitcoin” and is a “highly speculative asset” that “doesn’t constitute legal tender”, in response to a query on bitcoin.
In the Fed’s view, Bitcoin currently has a very small role to play in the U.S payment system. When asked her about the threat arising from the rise of the value of Bitcoin, she responded that until the banks don’t have any significant exposure to this highly fluctuating asset valuations, there is no threat to the financial system of the country.
She goes on to explain further: “It is not a stable store of value and it doesn’t constitute legal tender. It is a highly speculative asset and the Fed doesn’t really play any role, any regulatory role with respect to bitcoin other than assuring that banking organizations that we do supervise are attentive that they’re appropriately managing any interactions they have with participants in that market, and appropriately monitoring anti-money laundering [and] Bank Secrecy Act responsibilities that they have.”
Central Banks around the world except for China has maintained a passive approach to the cryptocurrency and refrained itself from restricting or regulating its movement. Banks around the world are embracing the technology on which Bitcoin and other cryptocurrencies are based, but is keeping away from having exposure to it.